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Collateral Requirements for FDIC Bank Term Loans

BY Value Capital Funding

January 10, 2024

Securing Your Future: Collateral Requirements for FDIC Bank Term Loans

Hey, Mr./Mrs. Small Business Owner! When it comes to getting a loan, collateral is your ticket to the game. But not all tickets are created equal; requirements can differ a ton between lenders. We’re diving into collateral and how it matters in FDIC Bank Term Loans. Stick around; this one’s important, especially if you’re trying to do MCA debt refinancing.

What is Collateral in Business Loans?

Collateral is like your safety net in the high-wire act of getting a loan. It’s the stuff you offer to back your loan promise. If you mess up and can’t pay, the bank takes your collateral. For the lender, it’s their insurance policy.

The Role of Collateral in FDIC Bank Term Loans

Collateral isn’t just any random thing you pawn off—it’s critical when you’re eyeing FDIC Bank Term Loans. The Federal Deposit Insurance Corporation keeps a close eye on how these loans work. Collateral can influence the interest rate, the amount you can borrow, and even whether you get approved.

Types of Acceptable Collateral

Banks aren’t super picky, but they do have their favorites. Real estate, equipment, accounts receivable, even your inventory can work. The good news? Here at Value Capital Funding, we’re pretty flexible. We work with you to figure out what makes the most sense for your business.  To be clear, in many instances, there will be no collateral requirement.  Most come to us to access a large and diversified lending platform that has many different FDIC insured commercial banks and nationally insured credit unions.   One application package provides access to all. 

Real Vs. Personal Collateral

Okay, let’s get this straight—real collateral means stuff you can touch, like your building or machinery. Personal (intangible) collateral? That’s things like stocks or patents. FDIC Bank Term Loans usually favor real collateral, but depending on the lender, personal assets might work too.

Collateral’s Impact on Loan Amounts and Interest Rates

Picture this—you offer a shiny, new tractor as collateral. That could get you a larger loan or a better interest rate. It’s all about making the lender feel comfy. If they know they can get their hands on something valuable, they’ll be more willing to cut you some slack on the loan terms.

How Appraisal Regulations Come Into Play

Don’t get too pumped about that tractor until you know its market value. Banks have rules (called appraisal regulations) for figuring out how much your collateral is worth. This step is key because it helps determine your loan amount and interest rates.

Value Capital Funding’s Collateral Approach

What sets us apart? We’re not just box-checkers. We look at the bigger picture—your financial strength, financial condition, and overall business needs. We tailor the collateral requirements to suit you -assuming we can’t get banks to meet your request using an unsecured approach first.  Bottom line:  If the standard options aren’t a good fit, we find ones that are.

Protecting Your Valuable Collateral

Hey, we get it. You worked hard for your assets. That’s why we offer clear lending guidelines that help you protect your collateral. And because we specialize in MCA debt refinancing, we can help you make your collateral work in the most efficient way.  Remember, that the majority of MCA debt refinancing transactions we’re involved in, do not have any collateral requirements at all. 

Make Collateral Work for Your Business

Need some tips on how to make the most of your collateral? Start by keeping it in tip-top shape. Maintenance matters. And make sure to keep good records—receipts, serial numbers, the works. It’ll make the appraisal process go smoother and could tip the scales in your favor.

Loan Lines and Other Options

Some businesses use loan lines backed by collateral to keep cash flowing. Know your options and consult with professionals to figure out what makes sense for your financial condition.

Secure Your Business’s Future with Value Capital Funding!

Ready to get unstuck and make a move? Your business deserves a lender who gets the whole picture. We offer flexible collateral terms to help you do just that. Don’t wait—reach out to Value Capital Funding now and secure your financial future!